2015 — Page 36

CORPORATE GOVERNANCE REPORT (CONTINUED)

COMPANY SECRETARY

Mr. Yuen Wai Kuen, Peter, the Company Secretary of the

Company, is a full time employee of the Group and has day-to- day knowledge of the Company's affairs. During the year, the Company Secretary has duly complied with the relevant professional training requirement under Rule 3.29 of the Listing Rules. The biographical details of the Company Secretary is set out in the section headed "Directors' and Senior Management's Profile" on page 8 of this Annual Report.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Directors acknowledge their responsibility for preparing the financial statements of the Group for each financial period to give a true and fair view of the financial position and financial performance of the Group. In preparing the financial statements for the year ended 31 December 2015, the Directors have selected suitable accounting policies and applied them consistently, made judgments and estimates that are prudent, fair and reasonable, and have prepared the consolidated financial statements on a going concern basis.

The statement of the Auditor of the Company regarding their reporting responsibilities on the financial statements of the Group is set out in the Independent Auditor's Report on pages 59 and 60 of this Annual Report.

Auditor's Remuneration

Apart from carrying out the annual audit, KPMG, the Auditor of the Company also carried out the review on the interim report of the Company. For the year ended 31 December 2015, the fee of the annual audit amounted to HK$1,689,000 whereas the fee for the interim review amounted to HK$305,000. Save for the interim review, KPMG did not provide any substantial non-audit services to the Company.

Risk Management and Internal Controls

The Company maintains a comprehensive and effective internal control system on income, capital and revenue expenditures. As part of internal audit, the Company has its own internal audit

department and maintained a system of internal control, with manuals guiding internal controls on business operation and conducted audits of all branches of operations on a regular basis. The Internal Audit Department would recommend improvement and strengthening in the implementation of all internal control systems. The Company and the Directors will review the effectiveness of the internal control system from time to time to meet with the changing business operation environment.

During the year ended 31 December 2015, the Internal Audit Department has conducted a review of the effectiveness of the system of internal control on the areas of financial, operational and compliance controls and risk management functions.

The members of the Risk Management Committee met twice in February and July 2015 respectively. The senior management and the Internal Audit Manager had identified the relevant risks of the operational units and the control strategies of the Company and incorporated significant risk management and control strategies in the internal audit reports for the review of

the Audit Committee members.

The Internal Audit Manager, who is independent to the Company's daily operations, reports directly to the Audit Committee and Group General Manager and regularly conducts audits of the practices, procedures, expenditures and internal control for business operations and corporate functions of the Company.

In view of the amendments to the Listing Rules on risk management and internal controls applicable from 1 January 2016, the Internal Audit Department adopted risk-based approach which included all significant risks in each year's. annual audit plan. Details of the significant risks are set out in the risk register. The risk register tracks the consequences and likelihood of risks, the risk rating and control strategies of the Group. The risk register has been reviewed by the Risk Management Committee during the year.

Certain significant risks such as business risk, financial risk, litigation risk and operational risk have been identified during the year through the process of risk identification and assessment. Relevant control strategies and mitigation on significant risks have been reported to Audit Committee.

Hong Kong Ferry (Holdings) Company Limited Annual Report 2015